Procurement with Purpose Newsletter No. 20 – June 20th, 2023

Procurement with Purpose Newsletter No. 20 – June 20th, 2023

After my moans about the lack of rain for the garden – it has rained, about an inch in two hours overnight! ?And in other good weather news, California’s water supplies have recovered from the year-long mega-drought of 2021/22.?Lake Oroville, the state’s second largest reservoir, which was in a desperate condition a few months back has rebounded and is again filled to capacity, says the state’s Department of Water Resources. It is at 100% of capacity, well above where it usually is at this time of year. ?A series of heavy winter storms and runoff from snow melting has meant the reservoir is 240 feet higher than on December 1st last year. ?Good news - although again it suggests we are in a period of extreme weather of different types.

What we can learn from Prince William

Let’s start with Prince William, heir to the British throne (don’t worry, there is a link to procurement with purpose coming.)?In the Sunday Times, he announced his commitment to “ending homelessness” in the UK. That is a noble cause although frankly I suspect it is impossible. But if he could even reduce it by 25% he would deserve great credit. From the Sunday Times interview:

For the past few years, his buzzwords for his work on mental health, the environment and homelessness have been “impact” and “relevance”. ??William is adamant that his new project will have “tangible impact” and help people who need support to get onto that “first rung of the ladder.”

It was those words - impact and relevance – that struck me because they are also two great words to think about in terms of your organisation’s approach to purpose and sustainability. “Impact” is relatively obvious. There is no point doing something that has no or very limited impact, obviously. Introducing a policy to support minority owned firms then doing nothing about it in practice has no impact. Admiring a nice page on your website doesn’t count. Similarly, merely putting some Scope 3 numbers together does not actually reduce emissions by one gramme. ?

I was talking to a friend the other day who was born and raised in a developing world country. They expressed frustration with many of the initiatives that make big claims about treatment of people in the supply chain. “It all sounds good but I know many people still work for $2 a day in my homeland. And their work feeds into products that are bought by the world’s biggest and richest firms”. ?That demonstrates a lack of real impact, despite some good intent.

Relevance has two dimensions. Firstly, actions must be relevant to your own organisation. Consider a small services firm or a hospital announcing that they are going to end the exploitation of the rainforest. That suffers from both the impossibility of having impact but also from the lack of relevance to their own work and stakeholders. But “relevance” also means the actions have to be relevant to those that benefit.?Giving local homeless people training in social media skills is not relevant if they primarily need a roof over their heads and maybe treatment for drug abuse.

I don’t know whether William can achieve anything meaningful here, but we wish him good luck and success. ?I’d have a more positive feeling about him becoming “my” king one day if it does achieve something impactful. ?But in the meantime, it is worth keeping impact and relevance in your mind when you consider purpose and sustainability initiatives.?

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SPP Tackles the Legislative Landscape

If you are reading this on the day of newsletter publication, then tomorrow (Wednesday June 21st) you can take part in the next Sustainable Procurement Pledge Ambassadors online meeting. It’s titled “The Legislative Landscape for Procurement” and it is at 3 – 4.30pm UK time.

The SPP founders Thomas Udesen and Bertrand Conqueret will be participating as well as Melissa de Roquebrune, the relatively new Executive Director of the SPP. ?The discussion will centre around the legislative landscape both for human-rights and the environment, and what it practically means for procurement now and in the near future. There will be some relevant speakers (legal experts and procurement professionals) then the delegates will split into virtual break-out rooms to discuss further. I hope to be present and it sounds like you (or someone from your organisation) probably should be too!?You can register for the (free) event via this link.

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Wildfires hit Broadway

Superstar actor Jodie Comer has now won a BAFTA, an Emmy, an Olivier and a Tony award. But last month but she had to halt her Broadway show Prima Facie. She was suffering from breathing difficulties because of the air pollution affecting New York, which came from wildfires many miles away in Canada. Comer halted her performance and called out “I can’t breathe this air” after just 3 minutes of the play. Understudy Dani Arlington stepped in and apparently got a great reception.

Other shows including a performance of the musical Hamilton as well as several sports matches were also postponed because of air quality and residents were advised to stay indoors or wear N95 masks outside.?In Canada itself, there have been local evacuations. About 7,500 people have left Chibougamau, the largest town in northern Quebec and roughly 4,000 residents have fled the Cree town, Mistissini. The weather pattern was funnelling the smoke down the eastern seaboard into the US, although matters have improved now with weather changes and fires being extinguished.

So now we have to add “smoke” to our list of natural phenomena-related supply chain risks, along with fire, wind, rain, snow, heat, drought, tidal waves, earthquakes and volcanoes. It’s a hard life being in charge of the risk register for a large global business these days…

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Improving ESG Reporting

This week’s essential reading is for anyone involved in ESG from a reporting and investing point of view. It comes from Hazel James Ilango of the Institute for Energy Economics and Financial Analysis (IEEFA) which “examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.”

Clearly, not everyone who is interested or involved in procurement with purpose or sustainable procurement is interested in that more “formal” ESG reporting side of things, but many are. After all, most of the factors and issues (emissions, modern slavery, human rights, etc) that get picked up in ESG reports or get considered in ESG-related investment decisions are heavily linked to supply chains.

The report is titled “Greater ESG Rating Consistency Could Encourage Sustainable Investments - Closer Scrutiny on ESG Measurements, Disclosures and Methodologies Could Improve Rating Systems”.

It highlights that ESG reporting and indeed some of the decisions around it are riddled with inconsistencies and paradoxes. For instance, many ESG-friendly or “sustainable” investment funds and fund managers won’t consider defence firms in their portfolios. Yet almost 18 months on from the Russian invasion of Ukraine, a lot of us might be quite glad that we have some pretty effective defence equipment manufacturers in the democratic western world. Another inconsistency is highlighted in the executive summary of the report.

“ESG ratings have been seen as a gimmick, as current rating practices are inconsistent with the way they measure a company’s long-term value creation and do not necessarily incorporate a company’s positive or negative impact on the environment or society…. ?For example, a recent backlash on ESG was sparked by the tweet “ESG is a scam” from Tesla CEO Elon Musk, following Tesla’s removal from Standard & Poor’s (S&P) 500 ESG Index in May 2022, while Exxon Mobil was retained. According to the Index, which tracks companies based on S&P’s own ESG standards, the fossil fuel major has better environmental, social and governance credentials than the electric vehicle giant”.

Other key findings include “wide-ranging and conflicting ESG ratings” and that “aggregating ESG scores into a single metric may not be appropriate”.?Absolutely agree on that one. ?Another issue is whether ESG performance should be measured in an absolute sense or against other (probably competitive) firms. So are you doing well if your supply chain human rights record is better than your peers – even if you have still had a number of modern slavery incidents recorded? Or should it be a case of absolute targets, so that everyone in a particular industry might be rated as a “failure” if they all suffer from problems?

The report is 28 pages long but it is clearly written and makes some excellent points – some quite shocking actually in terms of how the ESG rating industry is working. Well worth a read; and I hate to say it, but maybe Musk was right.

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Metallica Pile on the Emissions

In last week’s newsletter, we asked whether Coldplay’s current tour is really as “green" as the band claims. This week, the Popbitch newsletter laid into Metallica, another huge band.

Metallica's latest tour is playing 11 countries and about 50 gigs (over almost 18 months, so they are not exactly pushing themselves too hard…) ?Their show uses the biggest PA system ever designed for a tour, made up of over 500 speakers and 192 audio inputs. As Popbitch says, “The steel tower formation for their stage is so heavy and complicated that they need two sets of them: one to use in one venue, while the other is sent ahead to the next venue so work can begin on the load-in before the previous gig is over. ?Each of the two steel stages requires 21 trucks to transport it from city to city, meaning 42 trucks for the staging alone. The band and the rest of their set-up require a further 45, making 87 trucks in total”.

That’s a significant carbon footprint … ?and this demonstrates the problem for us all. So much of what we enjoy, and creates economic value, is pretty awful in terms of emissions too. Are Metallica going to give up touring? Are music lovers going to give up going to gigs (see the next paragraph)??And yet, while we go about our lives, the earth continues to get hotter.

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Talking of gigs… ?Last Friday I spent a pretty amazing evening watching and listening to perhaps the greatest rock performer of all time – Bruce Springsteen, at Villa Park, Birmingham. He is amazing for 73, providing three hours of non-stop high-energy performance.?For my friend who organised the trip it was his 40th Bruce gig. It was my second. The highlight was perhaps The River – a song that is both uplifting and very sad simultaneously. Fundamentally it is about the loss of hope and the disappointments of life - slightly alleviated by the power of happy memories (pretty deep, huh?) ?Friday was the first time Springsteen has played it on this tour.

The chap next to me (another Bruce fanatic, mid-forties, big guy, crew-cut, 4 pints of beer during the gig) got quite emotional. He was made redundant not long ago, he told me, and he thought Bruce had played that particular song because of Birmingham’s industrial past.?Somehow Springsteen, despite being a multi-millionaire, has an aura of authenticity that speaks to so many people.?I’m not sure how he does it but perhaps I’ll think a bit more about that for a future discussion. It’s hard to pin down, but authenticity seems to be some sort of super-power, so we might all wish for more of it. Here is a link to an amateur video of that song ?Bruce Springsteen & The E Street Band - The River - Villa Park, Birmingham - 16 June 2023 - YouTube?Listen to most of the 40,000-strong crowd singing 30 seconds in and then again at 1:25. Spine-tingling moments. ?